It’s hard to believe that at the turn of this century, with Y2K on people’s mind, the gold price was just $284 per ounce, down from $400 a decade earlier. Owning gold provides neither interest nor dividends, only glitter, capital gains and purchasing power. But the fact that the gold prices—now at over $4,000 an ounce—have run up so much in such a short span of time suggests a strong demand for safety and hard assets. Foreign central banks have, in fact, been major purchasers, along with many small-time acquirers. The desire to hold hard assets over what were considered to be hard currencies like U.S. dollars, Japanese Yen, and Euros is a reflection of uncertain times.
The inflation rate in the U.S. hit 3% in September—above what would be considered contained—and there was no inflation report from October because of the government shutdown. Still, the Federal Reserve cut interest rates three times in 2025 due to weakening job market reports and indicated that another cut was likely coming.
All the while, government debts across the globe are hitting record highs. Democratic governments where politicians are chasing votes may be unable to constrain the debt other than by letting loose the printing of money in future years. When inflation runs permanently high, so will land values and rent. Real estate can also serve as a good inflation hedge. Could real estate, therefore, be undervalued?
